As the manufacturing industry adapted to market changes, it started focusing only on addressing the customer delight factor. Engineering activities were intensified and regular production was sub-contracted. Thus, in the fabless scenario, the manufacturing industry does not have an elaborate facility for manufacturing products demanded by end customers. The facility is limited to only piloting the engineered product. After successful prototyping, products are sub-contracted for regular production. This helps to cut down the regular production cost and minimize inventory cost. Such an approach also contributes to robust planning for parts and production levels. Thus, a fables organization is essentially an engineering organization. As the fabrication facilities are not owned by the organization, this has assumed the name of “Fabless manufacturing”.

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In today’s world, the ‘fabless industry’ is synonymous with the ‘semiconductor industry’. The reason for this is the intensive role of the Foundry in this industry. The Foundry is a manufacturing facility where the entire fabrication process is performed for making semi-conductors. The entire process spans the making of the wafer, masking, building the circuit, and dicing. The dies are then tested and packed before shipping to customers. The wafer fabrication process is highly specialized and cost intensive. Hence, subcontracting is widely chosen in this industry. The manufacturing strategy that universally applies to this model is ‘make to order’.The subcontractor may provide the whole range of services involved in the wafer fabrication or may specialize only in one or more of them.